LONDON, Nov 5 (Reuters) - While the companies that dominate the world's $300 billion drugs industry slug it out for control, the main players in the the $35 billion agrochemicals world wait to learn their fate.

The merger battle that has broken out in the U.S. between Pfizer Inc, Warner Lambert Co and American Home is seen triggering a wave of drug consolidation that is likely to hasten a sweeping restructuring of agribusiness, still largely controlled by the pharma giants.

"I don't know how they will go, but it will be pretty quickly," one investment banker said on Friday.

Before Pfizer spoiled the Warner-AHP party, AHP made clear it was looking for an escape from its struggling agricultural business to focus on drugs.

It joins a queue of companies which all appear to have come to the same conclusion, including some of the biggest names in the business -- Switzerland's Novartis AG, the Anglo-Swedish combine AstraZeneca and perhaps even Monsanto Co of the U.S.

But as companies struggle to keep up with potential new titans like the mooted PfizerWarner by concentrating research budgets on high margin pharmaceuticals, they could find themselves selling into a buyers' market.

Throw in regulators' concerns about further consolidation in a strategic industry which is already highly concentrated, and many would-be sellers may be stuck.

"They can't all walk away from it. Who are you going to dispose of it to?" said Martyn Postle, head of the business strategy group at Cambridge Pharma Consultancy.

"It's a relatively consolidated business already, there are (regulatory) issues and if you float it you've got to have a taste for that kind of paper."

DRUG MARGINS RUNNING AT THREE TIMES AGCHEMS

The trend towards focusing on drugs with operating margins that run at three times those of agrochemicals was accelerating even before the latest moves in U.S. drugs.

The so-called life sciences model -- leveraging research and development across human and animal health and agrochemicals and geneticaly modified foods - has tumbled out of fashion.

"It seems as though the rationale for agri-businesses and pharmaceutical business units is being questioned across the globe," Morgan Stanely analysts Anfdrew Baum and Duncan Moore said in a research note this week.

Driving the shift is a downturn in agricultural markets and a plunge in commodity prices which has left agribusinesses struggling to maintain sales and margins.

And a backlash in Europe against genetically modified seeds and crops has also helepd focus minds in pharmaceutical board rooms about the long-term sense of sticking with the sector.

Novartis, currently the world's biggest agricultural player until the formation of Aventis by Germany's Hoechst AG and France's Rhone Poulenc next month, is looking at all options for its agribusiness.

And AstraZeneca is to pronounce on the future of its third-ranked operation in February.

In the U.S, Monsanto FUNDAMENTALLY ATTRACTIVE BUSINESSES

But whatever the problems facing agriculture, fundamentally they are strong businesses with the kind of profits that many industries can only dream of.

Among companies tipped as potential buyers are the Germans BASF and Bayer, and Dow of the U.S.

"Crop protection is an important business for us. Therefore BASF is certainly interested in participating actively in restructuring in that area," BASF management board chairman Juergen Strube said in August.

Aventis too is expected to remain a major player in the one area it enjoys clear global leadership, though trying to buy other companies while it merges its existing drugs and chemcials arms is likely to prove hard.

"We are in the process of integrating so maybe this is not the best time to consider further acquisitions," a spokesman for Hoechst said, adding it was watching events at AHP with great interest.

Current betting in Zurich is that Novartis will announce plans to spin off its business in the first half of next year, probably via flotation. Bankers have told Reuters that an attempt to combine its operations with those of AstraZeneca's is likely to founder on anti-trust concerns.

Pharmaceuticals industry consultant Robert Thong of Phizz Rx believes U.S. private equity groups like Kohlberg Kravis Roberts, Hicks, Muse, Tate & Furst Inc and Texas Pacific Group could offer a way out of the anti-trust impasse via management buyouts.

"These businesses are quite easy to value and understand and compared to any other industry thay have wonderful margins," he said.

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